| According to the IRS, there are five tests that must be met for a child to be your qualifying child. However, of these five tests only the first 4 tests need to be satisfied in order for you to qualify to claim your daughter as a dependent and thus be eligible both the "earned income credit and child tax credit". The 4 tests are as follows:
Relationship
To meet this test, a child must be your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them. Clearly, you have met this test, the child happens to be your daughter!
Age
To meet this test, a child must be under age 19 at the end of the year,
A full-time student under age 24 at the end of the year, or permanently and totally disabled at any time during the year, regardless of age. Clearly, as you have stated that your daughter is only 17 years old, so you meet this test as well!
Residency
To meet this test, your child must have lived with you for more than half of the year. Clearly, your child is living with you throughout the year and you have met this test as well!
Support
To meet this test, the child cannot have provided more than half of his or her own support for the year. I suspect you have provided more than half of your daughters support for the tax year 2008, and you can easily demonstrate this by documenting her lodging, books, food, clothing etc. The combined value of your support would be clearly more than the amount your daugther must have spent supporting herself. Again, it would seem that you would have met this test as well!
Now, once you qualify to claim your daughter as a dependent, there are 2 other tests that you need to satisfy before you can be eligible to claim the earned income tax credit (EIC) and the child tax credit.
1. The taxpayer must meet the Earned Income and AGI Test
The IRS has announced that for the tax year 2008, in order to claim the EIC the Single taxpayers "earned income and adjusted gross income (AGI)" must each be less than:
$38,646 ($41,646 married filing jointly) with two or more qualifying children;
$33,995 ($36,995 married filing jointly) with one qualifying child;
$12,880 ($15,880 married filing jointly) with no qualifying children.
2. The taxpayer must meet the Investment Income Test
Furthermore, the taxpayers "Investment income must be $2,950 or less" for the tax year 2008.
What is the maximum credit for 2008?
For the tax year 2008, the tax credit is as follows:
a)$4,824 with two or more qualifying children;
b)$2,917 with one qualifying child;
c)$438 with no qualifying children.
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